Draghi Touch Is Golden for Stocks

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By Sofia Horta E Corta

(Bloomberg) — Why buy European stocks? For Kerry Craig, the answer is, why not?

Craig, a global strategist at JPMorgan Asset Management in London, says European shares look like a bargain next to bonds. Corporate profits are picking up, while yields — already negative in some countries — can scarcely go lower. Plus, investors’ worst fears about Greece and Ukraine have receded.

“A lot of the negative stuff that was supposed to blow up in the past month didn’t,” Craig says. “We’re getting to the point where even a bond guy will tell you to buy stocks.”

His view is ratified by what’s known as the Fed model, a valuation metric that compares the equity market’s earnings yield to the rate on government bonds. While the measure isn’t unanimously embraced, if you use it, European stocks have never looked like a better buy. That’s even…

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